“Bipartisan Budget Act Requires Partnerships to Share a Portion of the Audit Burden”
On November 2, 2015, President Barack Obama signed into law the Bipartisan Budget Act of 2015 (the “Act”), a law that raises the U.S. debt ceiling through March 2017 and defers the next federal budget battle until after the 2016 elections. Notably, Title XI of the Act – “Revenue Provisions Related to Tax Compliance” – includes fundamental changes to partnership audit rules for all entities treated as partnerships and provides clarification on gifted partnership interests.
This Stroock Special Bulletin examines the key provisions of the Act, under which a greater share of the administrative tax burden rests at the partnership level rather than at the level of the individual partners, and discusses its implications for partnerships and partners. The Congressional Budget Office estimates that the audit streamlining provisions of the Act will raise $9 billion over the next 10 years.